I think your diapers look lovely! They do need fasteners and soakers, but otherwise I think they are quite usable.
The inside of a pocket diaper can be whatever you want, flannel included. A lot of pocket diapers are made with microfleece or suedecloth for their stay-dry properties, but you don't have use a wicking layer. I prefer not to use microfleece or suedecloth in my diapers. To me, it is a bulky, non-absorbing layer that can be problematic (holds odors, repels if not laundered properly) and my son doesn't seem to need it. I have a few microfleece PUL pockets for when I can't change him as often as I like, the stay-dry feature is nice then.
It is ok, on a fitted or fitted pocket, for the layers to roll to the inside or out however they want. You are right though, stitching around the legs will keep the edge tidier and the elastic rolled in one direction. Try stitching a casing around the elastic, so that there is about 3/8-1/2 inch between the edge and your stitching with the elastic in between. Every time you stitch through elastic, it loses some bounce. Sewing a casing around it rather than through it helps.
I find the Wee weka diapers are pretty much on target with sizing. Did you check out the newborn diapers further down the page?
There are lots of ways to sew elastic into a diaper, I will look around and see if I can find some links for you or maybe someone else has an idea.